Yellow Umbrella, South Korea’s mutual aid association for small and mid-sized business owners under Korea Federation of Small and Medium-sized Businesses (KBIZ), has selected three private equity (PE) managers for its alterative investment program.
Yellow Umbrella has recently chosen LB Private Equity, Lindeman Asia Investment and KTB Private Equity as its external alternative managers and received approval from Ministry of SMEs and Startups, according to M&A industry sources on April 6. The mutual aid association has reportedly notified the three firms around a month ago.
Yellow Umbrella closed applications for its external alternative managers that will manage a combined 60 billion won of its blind commitments on February 7. Nine domestic private equity firms and consortia – including a consortium of Korea Investment Private Equity (KI PE) and SKS Private Equity and a consortium of BNW Investment and Industrial Bank of Korea (IBK) – submitted proposals to obtain capital commitments from the mutual aid association. At the end of February, Yellow Umbrella shortlisted six PE firms and consortia from nine proposals.
During the same period, Korea Growth Investment Corp. (K-Growth) – the country’s fund-of-funds operator – and Korea Development Bank (KDB) were also in a process of selecting external managers for funds dedicated to investing in the materials, parts and equipment sectors. K-Growth and KDB received nine proposals from PE firms, of which SKS PE-KI PE consortium and BNW-IBK consortium were chosen as external managers.
This year Yellow Umbrella has removed the qualification that PE managers have a certain level of commitments from domestic institutional investors.
Starting from this year, Yellow Umbrella will choose external alternative managers twice a year, not just once. It has set a fund’s hard cap at 200 billion won this time, while a maximum fund size is expected to be raised in the second selection process scheduled later this year.
(By reporter Kim Byung-yoon)